M/S. EMMVEE SOLAR SYSTEM PVT. LTD., OFFICE AT NO.55, 6 v. SRI JITHENDRA JAIN, PROPRIETOR, AGED: MAJOR

referred to as per their rank and status before the Trial Court.

3. Brief facts of the case are that, the complainant filed the private complaint in PCR No.18414/2008 against the - 3 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015 accused, alleging commission of the offence punishable under Section 138 of NI Act. It is contended by the complainant that the accused had issued the cheque bearing No.072328 dated

27.09.2008 for a sum of Rs.2,00,000/- towards discharge of part of his liability. He assured to honor the cheque on presentation. When the cheque was presented for encashment, the same was dishonoured as payment stopped by the drawer. Legal notice was issued to the accused informing him about dishonour of the cheque and calling upon him to pay the cheque amount. In spite of service of legal notice, the accused has not repaid the cheque amount. Thereby, he has committed the offence punishable under Section 138 of NI Act. Accordingly, he requested the Trial Court to take cognizance of the offence and to initiate legal action.

4. Accordingly, the complainant filed another private complaint in PCR No.4518/2009 against the accused, making similar allegations and contended that the accused had issued the cheque bearing No.072329 dated 15.12.2008 for a sum of Rs.2,00,000/- and another cheque bearing No.072330 dated

28.12.2008 for Rs.2,00,000/- towards discharge of part of his liability. On presentation, same were dishonoured as funds - 4 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015 insufficient in the account of the accused. Legal notice was issued to the accused, calling upon him to pay the amount. Instead of paying the cheque amount, the accused had issued untenable reply and thereby, he has committed the offence punishable under Section 138 of NI Act. Accordingly, he requested the Trial Court to take cognizance of the offence and to initiate legal action.

5. The Trial Court took cognizance of the offence in the cases and registered C.C.No.10754/2009 and C.C.No.13188/2009 respectively and summoned the accused. The accused had appeared before the Trial Court and pleaded not guilty. The complainant examined himself as PW-1 and got marked Ex.P1 to P15 in support of his contention. The accused has denied all the incriminating materials available on record in his statement recorded under Section 313 of Cr.PC. He examined himself as DW-1 and got marked Ex.D1 to D5 in support of his defence in C.C.No.13188/2009.

6. Similarly, the complainant has examined himself as PW-1 and got marked Ex.P1 to P12 in support of his contention. The accused has denied all the incriminating materials available - 5 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015 on record in his statement recorded under Section 313 of Cr.PC. He examined himself as DW-1 and got marked Ex.D1 to D6 in support of his defence in C.C.No.10754/2009.

7. The Trial Court after taking into consideration all theses materials on record, passed similar judgments in both the cases on 29.01.2014 holding that, the complainant is successful in proving the guilt of the accused beyond reasonable doubt and accordingly convicted the accused for the offence punishable under Section 138 of NI Act, directing him to pay fine of Rs.4,05,000/- and in default to undergo simple imprisonment for 6 months in C.C.No.13188/2009. Similarly, he was sentenced to pay fine of Rs.2,05,000/- and in default to undergo simple imprisonment 6 months C.C.No.10754/2009.

8. Being aggrieved by the same, the accused had preferred Crl.A.No.189/2014 and Crl.A.No.190/2014 before the First Appellate Court. The First Appellate Court on re- appreciation of the materials on record came to the conclusion that the complainant is not successful in proving the existence of legally recoverable debt and therefore, the accused is entitled - 6 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015 for acquittal. Accordingly, both the appeals were allowed. The impugned judgments of conviction passed by the Trial Court were set aside and the accused was acquitted in both the cases. Being aggrieved by the same, the complainant is before this Court.

9. Heard Sri K.N. Harish Babu, learned counsel for the appellant and Sri. Prasanna K, learned counsel for Sri. K. Chandranath Ariga, learned counsel for respondents. Perused the materials including the Trial Court records.

10. Learned counsel for the appellant contended that the complainant is the manufacturer of Solar Water Heaters and the accused was the dealer. The accused used to purchase Solar Water Heaters on credit basis from 2004 till March 2008. An amount of Rs.6,00,000/- was due from the accused. Towards, repayment of the same, he had issued the cheques bearing Nos. 072328, 072329 and 072330 for Rs.2,00,000/- each, which are referred to in both these cases. Admittedly, the cheques were dishonoured and the legal notice issued by the complainant was served on the accused. The accused has given an untenable reply as per Ex.P7 produced in C.C.No.10754/2009. - 7 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015

11. Learned counsel contended that the accused has admitted dealing with the complainant. He also admits that 3 cheques belongs to his bank account and bears his signatures. Under such circumstances, the presumption under Sections 118 and 139 of NI Act would arise and the burden shifts on the accused to rebut the presumption. But the accused has not rebutted the presumption. Therefore, he is liable for conviction. The Trial Court had rightly convicted the accused. But the First Appellate Court committed an error in acquitting the accused. Hence, he prays for allowing both the appeals and to convict the accused in the interest of the justice.

12. Per contra, learned counsel for the respondent opposing the appeals contended that the complainant was the manufacturer of Solar Water Heater and the accused was the dealer. Their relationship was strained during March-2008. Hence, the accused stopped transacting with the complainant. But the complainant again approached the accused and requested to transact with him by placing the orders. In that regard, 3 blank cheques referred to by the complainant were issued as security. The same were misused by the complainant. The First Appellate Court on re-appreciation of the materials on - 8 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015 record came to the right conclusion that the complainant has not proved existence of legally recoverable debt.

13. Learned counsel submitted that the complainant has not stated as to how there was due an amount of Rs.6,00,000/- from the accused. When there is no details of the amount that was due, the complainant is not entitled for any relief. The judgment passed by the First Appellate Court is just and proper and it do not call for interference by this Court. Accordingly, prays for dismissal of the appeals.

14. In view of the rival contentions urged by learned counsel for both the parties, the point that would arise for my consideration is: "Whether impugned judgments of acquittal passed by the First Appellate Court suffers from perversity or illegality and calls for interference by this Court?" My answer to the above point is in the 'Affirmative' and pass the following: - 9 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015

15. The relationship between the complainant and the REASONS accused that the complainant being the manufacturer of Solar Water Heaters and the accused being the dealer, purchasing the water heaters, is not in dispute. It is also not in dispute that the accused had issued 3 cheques referred to above, which are marked as Exs.P1 and P2 in C.C.No.13188/2009 and Ex.P1 in C.C.No.10754/2009, with his signatures. It is also admitted that all the 3 cheques were dishonoured and the legal notice was served on the accused. Ex.P7 in C.C.No.10754/2009 is the reply notice issued by the accused.

16. When the accused admits issuance of the cheque, the presumption under Sections 118 and 139 of NI Act would arise. Even when the accused takes the defence that the blank cheques were issued as a security with his signature, the presumption under Section 139 of NI Act would arise. This position of law is made very clear by the Hon'ble Apex Court in Bir Singh Vs Mukesh Kumar1 in paragraph Nos. 34 and 36 reads as under: 1 (2019) 4 SCC 197 - 10 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015 "34. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.

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36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."

17. Once the legal presumption under Sections 118 and 139 of NI Act has arises, the initial burden on the complainant gets discharged and the burden shifts on the accused to rebut the legal presumption. The accused is required to raise the defence and probabalize the same. Even though the degree of proof on the accused is much lesser as it is only preponderance of probabilities, the accused is required to prove regarding his defence in order to probabalize his defence. In this regard, reliances could be placed on the decision of the Hon'ble Apex - 11 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015 Court in Rohitbhai J Patel vs The State Of Gujarat2 in paragraph Nos. 17 and 18 as under: ” 17. On the aspects relating to preponderance of probabilities, the accused has to bring on record such facts and such circumstances which may lead the Court to conclude either that the consideration did not exist or that its non-existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist. This Court has, time and again, emphasised that though there may not be sufficient negative evidence which could be brought on record by the accused to discharge his burden, yet mere denial would not fulfil the requirements of rebuttal as envisaged under Sections 118 and 139 of the NI Act. This Court stated principles in Kumar Exports [Kumar Exports v. Sharma Carpets] “20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non- existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that 2 (2019) 18 SCC 106 - 12 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015 the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence neither possible contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non- existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act.

21. The accused has also an option to prove the non-existence of consideration and debt or liability - 13 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015 either by letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Once such rebuttal evidence is adduced and accepted by the court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the complainant and, therefore, the presumptions under Sections 118 and 139 of the Act will not again come to the complainant's rescue.”

18. In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the trial court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of advancing loan to the appellant-accused. The aspect relevant for consideration had been as to whether the appellant-accused has brought on record such - 14 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015 facts/material/circumstances which could be of a reasonably probable defence." (emphasis supplied)

18. It is also relevant to refer to the decision of the Hon'ble Apex Court in M/s Kalamani Tex and another Vs P Balasubramanian3, wherein it is held in paragraph Nos. 13, 15 and 17 as under: "13. Adverting to the case in hand, we find on a plain reading of its judgment that the trial court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Section 118 and Section 139 of NIA. The statute mandates that once the signature(s) of an accused on the cheque/negotiable instrument are established, then these “reverse onus” clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him. This point of law has been crystallised by this Court in Rohitbhai Jivanlal Patel v. State of Gujarat para 18) “18. In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the trial court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant 3 (2021) 5 SCC 283 - 15 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015 witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such circumstances preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the appellant- accused.” "15. No doubt, and as correctly argued by Senior Counsel for the appellants, the presumptions raised under Sections 118 and Section 139 are rebuttable in nature. As held in M.S. Narayana Menon v. State of Kerala, which was relied upon Basalingappa, a probable defence needs to be raised, which must meet the standard of “preponderance of probability”, and not mere possibility. These principles were also affirmed in Kumar Exports, wherein it was further held that a bare denial of passing of consideration would not aid the case of accused.

17. Even if we take the arguments raised by the appellants at face value that only a blank cheque and signed blank stamp papers were given to the respondent, yet the statutory presumption cannot be obliterated. It is useful to cite Bir Singh v. Mukesh Kumar, where this court held that: - 16 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015 “36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.” (emphasis supplied)

19. Thus the position of law is very well settled. The said settled preposition of law is to be applied to the facts of the present case. The accused has categorically admits that he had issued 3 cheques referred to above with his signatures in favour of the complainant. Initially in the reply notice the accused had taken the defence in the said reply notice that the complainant had promised to pay commission to the accused for the business he had done. But he failed to pay the commission amount and therefore, the relationship between the complainant and the accused strained and the accused stopped dealing with the complainant since 12.03.2008. It is his further defence that during August-2008, the complainant approached the accused and requested to continue the business relationship. The complainant promised to supply the materials to the accused and in that regard, the accused had issued 3 blank cheques as - 17 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015 security for the business transaction. Those cheques were misused by the complainant by presenting for encashment.

20. Learned counsel was not in a position to explain as to what was the necessity to the accused to issue 3 blank cheques as security, while even according to the accused he has stopped transacting with the complainant since 12.03.2008. It is the specific defence taken by the accused that the complainant was due to pay the amount towards commission, which was not paid by him and therefore, the complainant was due to pay the amount to the accused. Under such circumstances, there was absolutely no reason for the accused to issue the cheques as security that too 3 different cheques. If at all the complainant has to issue the cheque for the amount that was due according to the accused. Even though the accused has examined as DW- 1, he has not explained the circumstances under which, he has issued the cheques as security. He has not made clear as what was the necessity for giving security. Under such circumstances, it is to be held that the accused has not probabalized the defence and hence, he is liable of conviction. - 18 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015

21. I have gone through the judgments passed by the Trial Court, it has taken into consideration the oral and documentary evidence in the light of the averments made in the complaint and arrived at a right conclusion. But the First Appellate Court accepted the defence taken by the accused that the blank cheques were issued as security only on the ground that all the cheques were having consecutive numbers. It has failed to notice that the accused has not raised a probable defence and not assigned any reasonable explanation as to what was the necessity for giving security to the complainant, when even according to the accused, he had stopped transacting with the complainant since 12.03.2008. It is not the contention of the accused that some amount was due from him to the complainant when he stopped transacting with the complainant. It is also not his contention that he never placed fresh order with the complainant and something was due to the complainant forcing him to issue blank cheques as security. When the defence taken by the accused is not reasonable, such defence shall fail and the presumption under Section 139 of NI Act will prevail. Therefore the complainant is bound to succeed and the accused is liable for conviction. Hence, the impugned - 19 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015 judgments of acquittal passed by the First Appellate Court is perverse and illegal, which is against the settled preposition of law and hence, it calls for interference by this Court.

22. Accordingly, I answer the above point in the Affirmative and proceed to pass the following: ORDER (i) The Criminal Appeals are allowed. (ii) The judgments dated 30.01.2015 passed Crl.A.No.189/2014 and Crl.A.No.190/2014 respectively, on the file of the learned Fast Track Court - IV, Bangalore are hereby set aside. (iii) Consequently, the accused is convicted by restoring the judgment of conviction and order of sentence passed by the Trial Court vide judgments dated 29.01.2014 passed in C.C.No.10754/2009 and C.C.No.13188/2009, on the file of the learned XIII Additional Metropolitan Magistrate, Bangalore, Send back Trial Court records along with copy of the judgment to the Trial Court for information and needful action - 20 - NC: 2024:KHC:44958 CRL.A No. 568 of 2015 C/W CRL.A No. 570 of 2015 i.e., to secure the presence of the accused and to issue conviction warrant. Sd/- (M G UMA) JUDGE SPV List No.: 2 Sl No.: 23